DeFi Leads In Ethereum Gas Fees Generation
Ethereum remains by far the largest smart contracts platform by market cap, perched at second in the market cap leaderboard. The network hosts decentralized applications (dapps) cutting across multiple sectors, with DeFi being one of the prominent ones.
DeFi Leads in Ethereum Gas Fees Generation
The dominance of DeFi in Ethereum shows smart contracts and decentralized ledgers have revolutionized finance. Managing partner of DragonFly took to X, sharing data from CoinShares, which confirms this position.
After launching in Ethereum, gas fees continue to grow. There was a notable dip after the ICO mania of 2017 and 2018. The annual gas fees generated tanked from $143 million in 2018 to as low as $46 million in 2019.
However, after this contraction, which came after the crypto winter of 2018, gas fees generated exploded. The pickup in momentum coincided with the popularity of ERC-20 tokens, permitting protocols to issue tokens and the rising adoption of DeFi.
DEX Gas Fees Fall as ERC-20 and Stablecoin Transfers Grow, Blame Dencun?
Interestingly, gas fees from DEXs continue to fall, dropping from $2.4 billion in 2021 to $512 billion as of 2024. Meanwhile, as of September 2024, ERC-20 transfers are in second place, up from third, where it has been from 2021 to 2023. Last year alone, ERC-20 transfers, a decent portion from meme coins like PEPE and stablecoins, generated $223 million for validators.
Additionally, gas fees from layer-2s continue to slump, according to data. In 2023, Ethereum generated $247 million in fees from layer-2 platforms like Arbitrum and Optimism. According to CoinShares, it was at $90 million by the time of their publishing. The sharp drop is primarily due to the activation of Dencun.
Conclusion
The dominance of DeFi in Ethereum gas fees generation is a testament to the revolutionary impact of smart contracts and decentralized ledgers on the finance industry. The fluctuation in gas fees, particularly from DEXs and layer-2s, is a sign of the evolving landscape of decentralized finance.
FAQs
Q: What is the current market cap position of Ethereum?
A: Ethereum remains the second-largest smart contracts platform by market cap.
Q: What is the significance of DeFi in Ethereum gas fees generation?
A: DeFi has emerged as the primary source of gas fees in Ethereum, with DEXs like Curve and Uniswap being some of the most popular DeFi protocols.
Q: What is the current state of gas fees from DEXs?
A: Gas fees from DEXs have been falling, dropping from $2.4 billion in 2021 to $512 billion as of 2024.
Q: What is the role of Dencun in the decline of gas fees from layer-2s?
A: The activation of Dencun has primarily contributed to the sharp decline in gas fees from layer-2s, from $247 million in 2023 to $90 million by the time of CoinShares’ publishing.
